An executive survey on global capital markets

A McKinsey Quarterly survey shows what business leaders around the world are thinking about key trends in the financial systems in their countries as well as the increasing globalization and integration of world capital markets.

A new survey by the McKinsey Quarterly reveals how business leaders feel about many key trends in the financial systems and global capital markets. Highlights from the survey include:

Executives report good access to funding—but not in China or Latin America. As world financial markets grow, more than 70% of executives around the world say they have good or very good access to funding from funding sources such as banks, bond markets, and equity markets. More than half expect their company’s use of external funding to increase over the next three years. However, executives from Latin America and China—two regions with less developed financial markets—report significantly less access to funding.

Companies have increasing exposure to foreign financial markets. Over half of the executives polled report their company’s exposure to foreign markets has increased over the last three years and two–thirds believe it will increase in the next three years.

A significant majority of execs view cross–border capital flows as positive. 84 percent see foreign investments in equities and bonds, cross–border lending and foreign direct investment as very beneficial, while just 7 percent view it as somewhat detrimental.

Executives believe a financial crisis is possible, but are surprisingly sanguine about it. 60 percent of business executives indicated they think a financial crisis is likely in the next three years but 77 percent say their country is prepared to withstand such crisis.

Surprisingly, banks remain the most common source of financing for companies despite rapid growth in the world’s equity and bond markets. More than 70% of executives report using banks as a source of funds, and one–third credit banks with having made significant developments in providing credit to the corporate sector in the last 3 years.

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